A recent decision found that a tenant had breached the covenant in their long lease flat which prohibited the use of the flat for any other purpose other than private residence. This was as a result of the tenant advertising the flat on the internet for short term lettings and subsequently arranging to let the property for a period of a few days/weeks.
Airbnb, which is the market leader home-sharing site, is popular among tech-savvy millennials looking for an opportunity to make a little extra cash. The tenant paid Council tax and utility bills but only occupied the property for 75% of the year. However, the flat had been let temporarily approximately 90 days over the last year.
The test applied for ‘Use as private residence’
The First Tier Tribunal held that the people who would be occupying the flats through the short term letting would not be occupying it as their home, hence leading to the decision that the flat was being used for a purpose other than as a private residence.
This decision was reinforced and elaborated upon by the Upper Tribunal where it was held that even though there was no requirement for the tenant to use the property as their only/main residence, it was however vital that there should be a connection between the occupier of the property to the effect that the occupier would think of it as their residence, albeit there may be a time limit imposed.
The time limit/duration of occupation was vital. The short term lettings being granted were alternatives to hotels and were mainly taken up by business visitors in London. There had to be a degree of permanence for the property to be regarded as the occupier’s private residence. Residing at the property for a few days a week, over weekends and even a few weeks was not sufficient to qualify as using the property as a private residence.
It all boiled down to the point that the lettings were for such short periods of time that the occupiers cannot consider the property as their private residence even for the duration they are residing there.
Do short term lettings breach ‘use of property as a Private Residence’ covenants?
The Upper Tribunal stated in its judgement that it was impossible to give a definitive answer to this question. It stated that each case is of course fact specific and will be decided as such. However, for property owners it reinforces the importance of the wording of covenants in a lease.
Advice on lease convenants
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